Fashion Retailer H&M Posts Surprise Dec-Feb Profit

The H&M clothing store is seen in Times Square in Manhattan, New York, US, November 15, 2019. REUTERS/Mike Segar
The H&M clothing store is seen in Times Square in Manhattan, New York, US, November 15, 2019. REUTERS/Mike Segar
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Fashion Retailer H&M Posts Surprise Dec-Feb Profit

The H&M clothing store is seen in Times Square in Manhattan, New York, US, November 15, 2019. REUTERS/Mike Segar
The H&M clothing store is seen in Times Square in Manhattan, New York, US, November 15, 2019. REUTERS/Mike Segar

H&M, the world's second-biggest fashion retailer, reported on Thursday a surprise operating profit for the December-February period, despite weak demand as consumers curtailed spending amid soaring inflation.

Operating profit in the Swedish group's fiscal first quarter was 725 million Swedish crowns ($69.73 million) against a profit of 458 million a year earlier and a mean forecast of 1.10 billion loss in a Refinitiv poll of analysts.

The company said consolidating the earnings of its Sellpy second-hand platform had boosted earnings by about 1 billion crowns.

While H&M showed signs of bringing its costs under control, it still struggled to compete with major rival Inditex, owner of Zara and other brands, as well as rapidly expanding fast fashion online retailers such as SHEIN and Temu.

"The external factors that influence purchasing costs continue to improve, work on the cost and efficiency program is proceeding at full speed, and many of the changes that we have made in recent years are starting to have an effect," Chief Executive Helena Helmersson said in a statement.

H&M's first quarter revenue, published separately on March 14, was worse than feared as the small increase in sales missed most estimates, analysts said at the time.

As Inditex lured customers back to in-person shopping after the pandemic, H&M's more cost-conscious base has been reluctant as inflation eats into purchasing power, while SHEIN and Temu won success online with cut-price items such as $10 dresses.



Seoul Authorities Find Toxic Substances in Shein and Temu Products

This photo taken on July 26, 2018 shows founder of e-commerce company Temu, also known as Pinduoduo, Colin Huang delivering a speech during the launch of the company's initial public offering in Shanghai. (Photo by CNS / AFP) / China OUT
This photo taken on July 26, 2018 shows founder of e-commerce company Temu, also known as Pinduoduo, Colin Huang delivering a speech during the launch of the company's initial public offering in Shanghai. (Photo by CNS / AFP) / China OUT
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Seoul Authorities Find Toxic Substances in Shein and Temu Products

This photo taken on July 26, 2018 shows founder of e-commerce company Temu, also known as Pinduoduo, Colin Huang delivering a speech during the launch of the company's initial public offering in Shanghai. (Photo by CNS / AFP) / China OUT
This photo taken on July 26, 2018 shows founder of e-commerce company Temu, also known as Pinduoduo, Colin Huang delivering a speech during the launch of the company's initial public offering in Shanghai. (Photo by CNS / AFP) / China OUT

Women's accessories sold by some of the world's most popular online shopping firms contained toxic substances sometimes hundreds of times above acceptable levels, authorities in Seoul said Wednesday.

Chinese giants including Shein, Temu and AliExpress have skyrocketed in popularity around the world in recent years, offering a vast selection of trendy clothes and accessories at stunningly low prices.

The explosive growth has led to increased scrutiny of their business practices and safety standards, including in the European Union and South Korea, where Seoul officials have been conducting weekly inspections of items sold by online platforms.

In the most recent inspection, 144 products from Shein, AliExpress and Temu were tested, and multiple products from all companies failed to meet legal standards.

Shoes from Shein were found to contain significantly high levels of phthalates -- chemicals used to make plastics more flexible -- with one pair 229 times above the legal limit.

"Phthalate-based plasticizers affect reproductive functions such as sperm count reduction, and can cause infertility and even premature birth," an official from Seoul's environmental health team told AFP.

One such chemical "is classified as a human carcinogen by the International Cancer Institute, so special care should be taken to avoid long-term contact with the human body", they added.

Formaldehyde, a chemical commonly used in home building products, was detected in Shein's caps at double the allowable threshold.

Two bottles of nail polish from Shein were found to have dioxane -- a possible human carcinogen that can cause liver poisoning -- at levels more than 3.6 times the allowed limit and methanol concentrations 1.4 times above the acceptable level.

Shein told AFP that they "work closely with international third-party testing agencies... to regularly carry out risk-based sampling tests to ensure that products provided by suppliers meet Shein's product safety standards".

"Our suppliers are required to comply with the controls and standards we have put in place as well as the product safety laws and regulations in the countries we operate in," the company added.

Seoul authorities found sandals from Temu contained lead in the insoles at levels more than 11 times the permissible limit.

Temu did not immediately respond to an AFP request for comment.

Seoul officials have asked for the products to be removed from sale, according to a government statement.

"Products that exceed the legal limit are products that directly contact the body, such as leather sandals and hats, so citizens should pay special attention," said Kim Tae-hee, an official in the capital.

"The Seoul Metropolitan Government will continue to conduct safety tests periodically and disclose the results."

In April, the European Union added Shein to its list of digital firms that are big enough to come under stricter safety rules -- including measures to protect customers from unsafe products, especially those that could be harmful to minors.

Shein and Temu have followed Chinese e-commerce titan Alibaba in challenging Amazon, especially by making inroads in the US market.